Conditions to attract the data centre developers are sufficient, the only thing missing is the initiative

Conditions to attract the data centre developers are sufficient, the only thing missing is the initiative

2018 02 01

Lithuania and the neighbouring Baltic countries are able to offer perfect conditions for a large-scale development of data centres. This is determined by the reliable supply of electricity, absence of extreme seismic activities, a stable political situation, a wide choice of available real estate and other beneficial factors. According to Mindaugas Kulbokas, the representative of Newsec international real estate consulting services company, the intensity of development can be stimulated by the coordinated actions of the business and political representatives.

Kulbokas, the Head of the Research and Analysis Group at Newsec, explained that the biggest advantage of the Baltic States is its stable economic, political and natural environment, which is taken into close consideration by the enterprises planning incorporation of branches abroad. For example, they avoid building data centres in the earthquake-prone zones or areas with high heat-wave frequency (making harder to keep the servers cool).

“The economic situation in the country is closely related to its political status and demonstrates the local level of reliability, stability of labour resources and assurance in democratic processes. Today, the world is divided into the categories of safe and unsafe countries, whereas we fall under the former one. The data centre developers are sensitive to how security in the county is being ensured, for example, a particular degree of insecurity is stemming from the Brexit events and complex integration of refugees in some countries in the Western Europe. Our region is not affected by these circumstances, thus, we should be striving to attract both large and small-scale data centres, as the demand therein is currently intensifying,” noted Kulbokas.

According to him, Lithuania and Estonia are fully prepared to welcome the data centres. Estonia is attempting to attract the investors and large foreign companies by a 360 ha territory on the Pakri peninsula, while the Lithuanians put their hope in the 75 ha territory of the industrial park of the Kruonis Pumped Storage Hydroelectric Plant (PSHP), which is ready for development. The park is situated in the free economic zone with availability of fiscal exemptions. Moreover, Kruonis PSHP can ensure uninterrupted supply of electricity even in the presence of serious failures of the power networks, which is of utmost importance for the builders of the data centres. Equally important is the fact that Kruonis PSHP is an object of national importance, which guarantees top level of security, while the water available at the plant allows performing simple server cooling manipulations.

Kulbokas also emphasised that Lithuania has a wide choice of available real estate and sites suitable for the data centres. The key is to attract the attention of the investors to Lithuania by launching marketing campaigns or aggressively introducing discounts – all the efforts will eventually pay off.

“Aside from the site in Kruonis, which is ready for development of data centres, as soon as NordBalt power connection between Lithuania and Sweden is put into operation and the prices of electricity drop by nearly 15 per cent, Lithuania will become truly appealing by its reliability and relatively cheap power supply. Namely that is one of the main advantages of the country welcoming construction of the data centres. Another enormous advantage is that construction of new buildings in the Baltics is still affordable, and in certain cases some old and vacant buildings may be used,” added he.

According to Kulbokas, establishment of data centres means a geometrically growing value added to the country: long-term investments, market assurance, involvement of other market players and local expansion of the services necessary for accommodation of the data centres. “Development of the data centres is a particularly promising area, because once the large IT companies make an investment into the data centre technologies, they plan to maintain operations for another 20-25 years, instead of leaving the arena in just a couple of years as their plans change. Construction of data centres is an expensive and meticulous business requiring highly qualified specialists, thus, one may say that this business constitutes a considerable investment. For these reasons, we simply must trigger the interest of international companies. Luckily, we possess the potential to excite the appetite of these companies for development of the data centres in the Baltic region,” emphasised Kulbokas.

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